National economy better, says NRB

By Laxman Kafle,Kathmandu, June 10: The foreign currency reserves, the balance of payment, the current account and remittance inflows have been in an improving situation until mid-May of the current fiscal year 2022/23.

The current macroeconomic and financial report based on the first 10 months of the current fiscal year made public by Nepal Rastra Bank (NRB) on Friday showed further improvement in the foreign currency reserves, the balance of payment and remittance inflows.

Likewise, inflation has also decreased in the first 10 months of the current fiscal year as compared to the same period last fiscal year.

According to NRB, consumer price inflation has remained at 7.41 per cent in the 10 months of the current fiscal year while it was 7.87 per cent 

a year ago. Inflation hit 8.50 in mid-October and 8.08 per cent in mid-November 2022.

However, the inflation is still higher than the target. The budget of 2022/23 and the monetary policy had set a goal to maintain inflation within 7 per cent.

Foreign exchange reserves at Rs. 1,470 billion

According to the report, gross foreign exchange reserves increased by 20.9 per cent to Rs. 1,470.33 billion in mid-May 2023. It was Rs. 1,215.80 billion in mid-July 2022.

In US dollar terms, the gross foreign exchange reserves increased by 17.6 per cent to 11.21 billion dollars in mid-May 2023 from 9.54 billion dollars in mid-July 2022.

Of the total foreign exchange reserves, the reserves held by NRB increased by 24.1 per cent to Rs.1310.66 billion in mid-May 2023 from Rs.1056.39 billion in mid-July 2022.

 The reserves held by the banks and financial institutions (except NRB) increased by 0.2 per cent to Rs.159.68 billion in mid-May 2023 from Rs.159.41 billion in mid-July 2022.

The share of Indian currency in the total reserves stood at 22.6 per cent in mid-May 2023.

Based on the imports of the first 10 months of 2022/23, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports for 

11.2 months, and merchandise and services imports for 9.7 months, read 

the report.

BOP surplus up, current account deficit down

Meanwhile, the Balance of Payments (BOP) remained at a surplus of Rs.214.67 billion in the review 

period compared to a deficit of Rs. 288.50 billion in the same period the previous year.

In US dollar terms, the BOP remained at a surplus of 1.63 billion dollars in the review period against a deficit of 2.41 billion dollars 

in the corresponding period of the previous year.

Similarly, improvement has also been seen in the current account during the review period even though it remained at a deficit.

The current account remained at a deficit of Rs. 54.67 billion in the review period compared to a deficit of Rs. 545.06 billion a year ago. 

In US dollar terms, the current account registered a deficit of 424.5 million dollars in the review period compared to the deficit of 4.55 billion in the same period last year.

In the review period, capital transfer decreased by 20.5 per cent to Rs.6.36 billion and net foreign direct investment (FDI) remained at Rs. 4.36 billion.

In the same period of the previous year, capital transfer and net FDI amounted to Rs. 7.99 billion and Rs.16.65 billion respectively. The second instalment of Extended Credit Facility (ECF) of Rs.6.88 billion (USD 52.71 million) has been received from the IMF in the first 10 months of 2022/23

Remittance earning crosses Rs. 1,000 billion

Remittance inflows increased by 23.4 per cent to Rs. 1,005.18 billion in the review period compared to an increase of only 0.5 per cent in the same period a year ago. The country has received remittance of around Rs. 102 billion in the month of Baishak (from mid-April to mid-May) alone.

In US dollar terms, remittance inflows increased by 13.4 per cent to 7.70 billion dollars in the review period against a decrease of 1.2 per cent in the same period the previous year.

The number of Nepali workers (institutional and individual-new) taking approval for foreign employment increased by 51.4 per cent to 421,279 in the review period.

The number of Nepali workers (renew entry) taking approval for foreign employment increased by 3.7 per cent to 238,976 in the review period.

Net transfer increased by 22.5 per cent to Rs.1,110.22 billion in the review period. Such a transfer had increased by 0.3 per cent in the same period of the previous year.